In an environment of uncertainty and economic volatility, it is paramount that the finance function have the ability to track non-core, or indirect, costs and document savings on these expenditures. The reason finance executives should care about measuring savings on non-core, or indirect, expenditures goes beyond the fact that they can equal 15%-40% of company revenue. The Hackett Group has found that companies capable of tracking realized savings as they occur, as opposed to booking the savings promised at the time supplier contracts are negotiated, see 71% higher actual savings. The problem is that measuring savings on indirect spending is deceptively difficult. Achieving savings visibility requires a combination of technology, process and expertise and deep collaboration with the procurement organization.

Contributors: The Hackett Group
Categories: Whitepaper
SRC Type: Realization, Sourcing